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CONTENTS
VOLUME 35,ISSUE
ENTREPRENEURS
36
| September
26
-
October 2
15
15
Yours to keep
KeepCuo's Abigail Forsyth shares
the lessons she learnt on the hard
road to selling her reusable cups.
Notes from The Valley
Smart Talk: Richard Branson 21
@ eusNnss
22
Hi-Fi way
JB Hi-Fi's Terry Smart says the
crowded layout of his stores serves
a very important purpose,
Rebecca Huntley
Phil Ruthven
30
u LEADERSHIP
Se*n th*r*, d*ne thnt
Universities are lookin$ for a new
breed of industry practitioners'
that bring real corporate world
experience to their programs.
Leo DAnqelo Fisher
fl pryqpsqqtgryq
34
R*vi*w n*L:*:*t*cf
The Coalition won't touch the
GST in its first stint, but longer term,
its future could be up for review,
Georqe Beaton
Magic cup
Sales aside, KeepCup's Abigail Forsyth is just as pleased
with the amount of waste she's keeping out of landfills.
renlrer
hr..,
Q^^+^*t^^/ oA
n^+^h^. o onl e
THE MAGIC CUP
KeepCup has stopped millions of containers going to landfills; it's also a
triumph of marketing, design and exporting. Report: Michael Bailey
Continued-rrofost
ffi
The epiphany came not long after
Abigail Forsyth had returned to work
after the birth of her daughter, running
Melbourne's Bluebag chain of cafds
with her brother Jamie. "My daughter
Bess was 18 months old, and I'd be
having a coffee in a disposable cup in
the morning and she'd have her milk in
a sippy cup. It got me thinking would I
ever give her milk in a disposable cup?,'
AJready feeling guilty about the
Yours to keep
Business lessons from Abigail Forsyth
Don't be afraid to share the idea
you've just come up with
"You need all the feedback, positive and negative,
that you can get. Remember, you've got to go out
and sell this thing,"
thousands of polystyrene coffee cups
her 10 caf6s were sending to landfitl
everyweek, Forsyth decided that ifher
answer to that sort of question was ,no,,
then plenty of other people could be
persuaded to drop the disposable habit
Your most important client isn't
always the customer
too.
people would be less self-conscious about taking
our product into a cafe if they knew the barista was
going to smile and say'good on you,.,,
"Keeping the barista happy is so crucial to our
successr even though they're not the one paying
$12 for a KeepCup. ln the early days we knew that
Five years after her epiphany, the
KeepCup company - Abigail, chief
executive officer, Jamie, chief operating
officer - has sold 3.5 million reusable
plastic coffee cups in 32 countries, and
the business s turning over more than
$6 million a year.
The story of how Forsyth did it is a
study in the power of a simple idea,
when that idea is backed by true
believers.
"KeepCup has succeeded in building
a story about sustainability, but you
won't see it on a billboard, or if you go
to its website you wont read about a
KeepCup environmental foundation,,,
says the managing director of
Interbrand Australia, Richard Curtis
(who's not worked with the company).
"The entire brand is in the utility of
the cup itself."
Startine a re-use
revolution
The reusable coffee cup had, ofcourse,
been around a long time before Abigail
Forsyth came along.
The problem was its desperately
uncool reputation.
"They had come out of that filtered
September 26 - October 2 2019
Never forget your goal
"l've never measured our success in cup sales, even
as they've gone into the millions. We,re about the
reuse rates and the number of disposable cups
diverted. We don't want someone to buy a KeepCup
and stick it in their cupboard."
Continued next page
Through
KeepGups,
Abigail and ramie
Forsyth have sold
3.5 million
reusable coflee
cups in 32
countries.
www.brw.com.au
coffee culture in the United States,
where people wanted their reusable
cup to be a thermos. Just in case they
wanted to drink the rest of their coffee
in like five hours," Forsyth explains,
wincing visibly at this affront to
Australia's "light roasted" coffee culture,
delivered to us courtesy of the post-war
wave of Italian immigrants.
Befitting something supposed to be
carried around by a truck driver from
the American mid-wesg Forsyth
remembers that the reusable cup
designs available were ungainly and
ugly affairs.
"They didn't fit under the brew head
[of t]re cafd coffee machinel, you
J
ii
Continued next page
0
Y
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September 26 - October
2 2A13
//
"a
Cup, but the feel- go
improves the coffee
ov er disp o s able
polystrene cups.
flav our
inthe initial decision to buy
a Keep
Flayoursayer:
Polyethylenelining
_-_-
Colours arekey:
Bold colours are more importdnt
than environmental concerns
o d.
factor promotes reuse.
Fightingfads:
is wewant to
"Thebottomline
make sure KeepCups aren't just
afad. If we mean something to
people, wewon'tbe thrown out."
Brandontheband:
"Our mission in the next
12 months is to get users to
associate the cup more with the
brand on the ban{ rather than
Mindthemessdge:
everyone just calling
them
Ke ep Cup s,
Forsyth
sustainab ility me s s age
walks afineline. You can
r e ally put p eople off if you
" The
" Abigail
says;.
tellthemwhatto do."
From previots page
Melbourne called Cobalt Niche. About
$5000 later, Forsyth was one holding
the protot)?e KeepCup (christened by
Andy Sargent from South Southwest)
in a slightly trembling hand.
The design has changed over the
years, but perhaps the most important
KeepCup element was there from the
start. The original 8-ounce (240millilitre) protot)?e mimicked the size
couldnt make a decent laffe in them,"
she says.
"The barista also had no way of
knowing the internal volume of the
thermos, so you'd end up with too
much or too litde milk. They'd roll their
eyes whenever someone came in with
qne so you'd end up with a poor
customer service experience all round."
Forsyth would have to invent
Bluebag's solution to its disposable cup
problem herself.
Luckily for her, the Bluebag chain
provided two important ingredients for
ofa standard
such an invention's success.
One, they were throwing off plenty
of cash. This allowed Forsyth to engage
a firm of Tasmanian-born graphic
designers called South Southwesg and
some industrial designers out of North
September 26 - October
u
2 2013
caf6 disposable cup, so
it
would not interrupt a busy barista's
production line.
"It felt like a lot of money to have
spent on this crazy idea for a better
plastic cup," she remembers. "Of course
this was in 2009, before 3D printing. It
would cost you about $50 today."
In any case, that protot)?e paid for
itself many times over. Filled with the
zeal of. a born-again reryder, Abigail
and her brother refined their pitch for
the KeepCup by presenting it to about
200 different companies as an
environmentally friendly branding
opportunity.
"We were told that if you can't sell a
plastic cup offthe prototype, there
probably isn't a market for ig" Forsyth
remembers.
The spiel was refined enough that by
the time Forsyth rode her bike to a
meeting with National Australia Bank
(NAB) at its Bourke St headquarters,
prototype KeepCup in her backpack,
"alI I needed was a bit of luck'.
That arrived in the fact that NAB was
moving many of its operations to new
'six-star green rated' buildings, and
decide KeepCup was a good gift to staff
in line with that ethos of sustainability.
"They ordered 5000, off the
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\
HNTREPRENEIJ'RS
that's a lovely thought," KeepCup tells
its potential customers.
Nevertheless, it was the use of funlcy
primary colours which seemed to get
most of the early buyers more excited.
"So now we pitch hard on them
looking good, and hope that you keep
using them because you feel good,"
Frompreviotu page
n
'@
'
Be careful what you wish
for
"ln some ways we've been a victim of the success of the brand,
where KeepCup is becoming a generic term for all reusable cups,
including the cheap Chinese copies which leak, burn your hand and
create inedia around reuse," Forsyth says. Becoming a generic
name and losing the original trademark's meaning is a danger for
many successful brands, says lnterbrand managing director Richard
Curtis, with the Hoover vacuum cleaner company being history's
most famous victim. "However in KeepCup's case l'd say there's
Forsyth says.
Grinding them out
"Once we had those sales from NAB
and EnergyAustralia we had the
confidence to go into full production,"
Forsyth says.
All that pitching also helped
KeepCup win two grants of $30,000
each - one from Melbourne Ciry
Council's Small Business, Micro
Business and Social Enterprise Grant
program, the other from Design
Victoria - which helped towards the
enough depth and meaning there to survive that People interact
with more than the logo," he says.
H
"isF
TUrn clients into evangelists
"When a cafe makes an order for KeepCups, we give them all the
ideas we've got for maximising sales," Forsyth says. "We encourage
them to count and publicise reuse rates - they're now as high as
6 per cent or 7 per cent in some of our independent cafes - and
offer discounts to clients who bring in one of our cups, A branded
disposable polystyrene cup can cost a small cafe as much as 250,
so there's real savings there. But we know that cups aren't their
core business - coffee is, so the other important aspect is not
interfering with their ability to pump out those lattes."
prototype. I remember sort of floating
back dor,rmstairs and ringing my dad,'
Forsyth says.
An entrepreneur himself, with a
business selling computer accessories,
Forsyth says her father is always the
first person with whom she shares her
successes.
'My parents weren't that thrilled
when I dropped out of law to run caf6s,
and they were sceptical of this plastic
cup thing too," Forsyth says.
"I remember I told dad the NAB
news and his first words were -'Don't
celebrate until you get the purchase
order'."
Pitching plastic
The purchase order did arrive, followed
shortly by another for 5000 KeepCups
from EnergyAusralia in Sydney. This
$500,000 cost of tooling for KeepCup's
initial production run.
The Forsyths also needed a short-
early success came despite the pair
were still experimenting wi*r two
different pitches. One focused on the
sustainability story a grown-up version
of which still appears ih KeepCup's
marketing materials. with 3.5 million
KeepCups now sold globally, the
company invites you to imagine a
situation where 80 per cent of those
3 miilion "environmentally conscious
commuters" drink eight takeaway
coffees perweek. In that scenario,
KeepCup users will have diverted
3.5 billion disposable cups from landfill
in the past year.
"This equates to removing over 4000
tonnes of disposable cups from the
waste stream and saving enough
energy to power 5000 homes for a year.
Furthermore, this leaves 50,000 trees
left standing in a forest somewhere
-
term bank loan, which Abigail
confesses was not from its first
customer (although KeepCup has since
switched to banking with NAB).
It was once the boxes of KeepCups
began arriving - from the factory in
Melbourne's Lilydale that KeepCup
retains to this day - that the Bluebag
caf6s came into their or,vn for a second
time.
"We were still our own biggest
customers in the early days, and the
feedback from customers was a Sreat
guide to what worked and what didn't "
Forsyth says.
The siblings soon figured out that the
most important client for KeepCup,
however, wasn't a customer at all.
"It's the floor staff in a caf6 that have
the most say in what gets ordered in,
it's a bottom-up business in that way,"
Forsyth says. The barista is customer
Continued next page
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IL. J
BRI
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September26- October
2201g I tg
BRITI
From previous page
which KeepCup has long targeted,
induding with its sponsorship of the
last World Barista Championships that
were part of May's Melbourne
hrternational Coffee Expo. (KeepCup
built a washing-up stand to encourage
reusable cup use and help divert some
of the 30,000 disposable cups it
estimated would be ttrovm away
during the four-day event).
Barista feedback has been crucial in
KeepCup's evolution.
The cups have a polyethylene lining
Tony Surtees
COA, Brandscreen
few weeks ago I was on a panel with Tim Draper
Valley's most prolific venture capitalists,
speaking at the AlwaysOn lnnovalion Conference in
Mountain View, California You might imagine this
conference would be US-centric Bui I was surrounded
by people from Australia, Germany, Chin4 Japan, South
Africa. . . and the US.
Draper Fisher Juryetson's portfolio companies generate
most of their revenue out-side the US through the DFJ
Global Network of early-stage venture capital funds.
ln Drapeds view, the old investment maxim "never invest
in any business that is more than a half-day drive away'' is
gone. While Silicon Valley is in Californi4 the industry that
is called "the Valley'is now global and is driving innovation
and entrepreneurship everywhere. lt has a unique culture
and mindset. lt breathes in people and money and
breathes out opportunity and energy like a global
entrepreneurial respirator.
lndonesia, Chin4 Russia and Mexico have the highest
percentage growth worldwide in new internet users, tech
clusters and innovation hubg so why come to the Valley
for a con{ereirce like this? Silicon Valley is not the only
place to come if you wanted to see whafs new in
I
.{
\one of Silicon
technology.
A medical technology consultant from the UK put it
simply.'There is a different mindset here. ln Europe, you
tell someone about your plan for a new venture and they
point out all its drawbacks,'she said. "ln Silicon Valley, the
default response is,'How can I help? "
So for all its power, resources, creativitT and history, I
believe the greatest asset of 'the Valley" is its attitude of
collaboration. lt's not only the aggregation of money, talent
and drive. The siate of mind that is 'the Valley'' has
collaboration at its core and thafs what keeps
entrepreneurs coming back,
Tony Suftees is the chief operating officer of Brandscreen
and a board member of Commercialisation Australia.
20 |
September 26 - October 2 2013
|
which, in ad hoc barista taste tests, was
found to make the coffee taste better
than the straight polystyrene of which
most disposable cups are made. That
said, Forqrth admits the KeepCup will
neverbe the equal ofthe ceramic cup
favoured by the sit-in purists.
New sizes have been added to match
the existing standards in disposable
cups, so a KeepCup is less prone to
disrupting a coffee production line,
particularly in morning peak where
every second counts. KeepCup now
makes a 4 ounce (120rnl) babycino
size, regular (8 ounce) and large (12
ounce) editions, plus a 16 ounce to
help it break into ttre US market.
The company also needs to stay on
top of trends in what can be a frivolous
market. It's about to introduce a 6ounce KeepCup to cater to a new craze
- coming out of Melbourne, where
else? - for three-quarter-sized lattes,
otherwise know as "magics".
"They're for people who want less
milk and a stronger coffee," Forsyth
explains.
The world cup
ln addition to the 20 people it now
employs in Australia, KeepCup has a
nine-person office in london and a
five-person beachhead in the arts
district of dovrntown Los Angeles,
servicing its 26 distribution partners
around the world, which are mostly
caf6 chains and/or coffee roasters.
The global push has required a
transition of the KeepCup business
model.
KeepCup's supporters to date have
been small caf6 chains and boutique,
independent coffee roasters. An order
for 15,000 branded KeepCups from
KeepCup now has a
global presence.
Will Young was
crucial to building momentum in the
first six months of the business.
However the big Wild Bean chain
became a KeepCup distribution partner
in March, and Forsyth sold 15,000 cups
to its Ukrainian equivalent at around
Campos Coffee founder
the same time.
She's not worried about losing cachet
with a few hipsters.
"The true fans of KeepCup erre the
ones who believe, like us, that many
small acm can add up to a phenomenal
difference for the environment. With
the KeepCups that Wild Bean sold in
their first three months they diverted
98,000 cups from landfi[, and that is
the kind of result I'm after."
Even the world's largest coffee chain,
Starbucks, is not beyond Forsyth's
ambitions.
'At the moment they would just go
and knock off a reusable cup in China;
we're not bringing them anything. But
once we've built the brand value in the
US like we have in Australia, we'll be
talking to them."
sHff
www.brw.com.au
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